Risk management through statistical edge, mechanical rules, and strict mathematical execution.
Most investors approach options as a speculative tool to make quick profits. At DataSente, we view options as an insurance model. By systematically selling premium, we act as the insurer, not the insured.
Our philosophy is based on maintaining Sente. This means we have control over our exposures, margin requirements, and positions at all times. We achieve this through:
By trading exclusively in highly liquid indices (such as SPX and NDX) and stocks with high trading volume, we avoid liquidity risks and minimize bid-ask spreads.
The Multiple Entry Iron Condor (MEIC) framework forms the mathematical foundation of our delta-neutral premium collection. All positions are managed in a fully automated manner using TAT (Trade Automation Toolbox), driven by alert signals sent from TradingView.
The engine supports multiple mechanical option strategies, with a strong focus on active risk management during the trading day:
| Option Strategy | Execution & Management (TAT / TradingView) |
|---|---|
| 0DTE Iron Condors | Intraday premium selling focused on rapid theta decay at the index level. |
| 0DTE Credit Spreads | Puts & Calls, continuously monitored and automatically closed or adjusted during the day if risk thresholds are met. |
| Debit Spreads | Put & Call spreads for defined, directional market exposure with restricted risk profiles. |
| Calendar Spreads | Spreads deployed to capitalize on shifts in the implied volatility term structure. |
| Execution Engine | Trade Automation Toolbox (TAT) with real-time alerting directly from TradingView. |
By combining mechanical execution with TradingView and TAT, we eliminate human errors and emotions during rapid market swings. Credit spreads are continuously monitored and closed intraday if needed.
Open MEIC ServerOur approach to Short Puts is directly derived from Tastytrade's mathematical research. We focus on selling puts on high-quality underlyings with a high Implied Volatility Rank (IV Rank).
The strength of this method lies in the mechanical management rules. We do not wait for expiration, but close positions early to minimize the risk per day in the market.
| Rule | Tastytrade / Sente Method |
|---|---|
| Entry DTE | Target 45 days (optimal theta acceleration) |
| Entry Delta | 0.30 Delta (for cash-secured) or 0.16 Delta (leveraged) |
| Profit Target | Close at 50% of maximum profit |
| Time Management | Always close or roll at exactly 21 DTE (to avoid Gamma risk) |
| Defense | Roll to next cycle for additional credit if breached |
Around 21 days before expiration, Gamma risk (sensitivity to price jumps) starts to increase exponentially. By mechanically closing or rolling positions at 21 DTE, we avoid large, unexpected losses and maintain 'Sente' at all times.
In addition to delta-neutral condors and puts, we use directional, capital-efficient spreads to benefit from volatility differentials and long-term trends.
Calendar Spreads: We buy a longer-term option and sell a shorter-term option at the same strike price. We benefit from the faster time decay (Theta) of the short-term option and changes in the volatility curve.
Diagonal Spreads & LEAPS (Poor Man's Covered Call): We buy a deep in-the-money call option (LEAPS, >1 year expiration, Delta >0.85) as a synthetic stock. Against this, we sell short-term, out-of-the-money calls to generate dividend-like income with only a fraction of the capital requirement.
These strategies are excellent for family offices that want to maintain exposure to quality stocks (such as Microsoft, Apple, or ASML) while simultaneously generating extra yield and hedging downside risks.
All our proposed options methodologies have been backtested over 15+ years of historical market data (including the 2008 financial crisis and the 2020 COVID crash).
View our Research & Backtests